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Business Line of Credit Calculator NZ: Repayments & Costs

Updated 2 August 2026
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How to Use Our Line of Credit Calculator
  • Enter the credit limit you want to access, the amount you plan to draw down first, and how long you expect to keep those funds drawn. Then set the interest rate the lender has quoted, the weekly principal repayment (lenders usually use 0.5% or 1% of the drawn balance), and the weekly service fee (a small percentage of your whole limit).
  • The calculator shows your initial weekly repayment, the interest you pay over the period, the service fee, and, unlike most lender calculators, the total cost of borrowing, including the service fee. It also shows how much you are paying on the part of your limit that you have not drawn.
  • A line of credit charges interest only on what you draw, which is its real strength. The catch is the service fee, which runs on your entire approved limit whether you use it or not. The single biggest saving available to you is to ask for a limit close to what you will actually use.
  • Know this first: A line of credit suits short, unpredictable cash-flow gaps you can clear quickly. If you need a set sum for a planned purchase and will pay it down steadily, a term loan is usually cheaper. Our guide to business loans explains every option and the lower-cost alternatives worth checking before you borrow. ​

Important: Be careful of lender calculators and make sure you always understand the total cost of any Line of Credit.
  • Some lender calculators show you the interest, not the total cost.
  • In the case of a Line of Credit, the interest figure can appear reasonable because you genuinely pay it only on what you draw, but the service fee on your whole limit is doing quiet damage in the background. It is often omitted from the "total" the lender displays.
  • Our view is simple - before you sign, work out the all-in cost, interest plus every fee, as a dollar figure, then divide it by the amount you will actually use. That gives you the real rate. If it is much higher than the headline number, you now know why and can decide whether the flexibility is worth it. For short cash-flow gaps, it often is. For anything you will carry for months, it usually is not, and a business loan or a cheaper secured option should be considered.​

Common Question: Is a line of credit cheaper than a business loan?
Business Line of Credit Calculator

A line of credit charges interest only on what you draw, but a weekly service fee runs on your entire limit, drawn or not. This shows the full picture, including the costs the lender's own calculator leaves out.

$
$2k$500k
$
$0$30k
Interest stops the moment you repay, so a shorter drawn period costs less.
% p.a.
10%40%
% of drawn
The slice of the drawn balance you repay each week. Lenders often use 0.5% or 1%.
% of limit
Charged on your whole limit every week, whether you draw it or not.
Initial weekly repayment
$0/ week
Includes interest, a principal slice and the weekly service fee.
Real cost on the money you actually use
0%p.a.
Where your cost goes over this period

Estimated repayment schedule

First 10 weeks. Interest falls as you repay principal, while the service fee stays flat.

WkRepaymentInterestPrincipalService feeOpeningClosing

Illustrative only and not an offer of credit or financial advice. Interest is calculated on your drawn balance and the principal slice and service fee are charged as shown. A line of credit is typically renewed every two years subject to the lender's review, and minimum repayments may not fully clear the balance while funds remain drawn. Rates, fees and limits are set by your lender after assessing your business. Always check the contract before you sign.

​What a line of credit actually costs
  • The headline figure a lender shows you is the interest, and a line of credit keeps that low because you only pay interest on the balance you have drawn down, calculated daily and usually charged weekly. Repay the balance, and the interest stops.
  • What the lender's own calculator usually leaves out of the "total cost" is the weekly service fee, which is charged on your full approved limit, drawn or not. We believe that this is where the real cost hides.

The cost issues and risks are best explained with a simple example:
  • Drawing $5,000 from a $30,000 limit at 31% p.a. for three months means the interest comes to $364.18, which is the number a lender leads with.
  • But the service fee over the same period adds another $179.40, taking the true cost of borrowing $5,000 to $543.58. Of that service fee, around $149.50 is charged on the $25,000 of limit you never touched. Counted properly, you are paying roughly 46% a year on the money you actually used, well above the 31% headline rate.
  • To make a line of credit cost effective, it's best to right-size your limit. Every extra dollar of limit you are approved for, but do not draw, still attracts the weekly service fee. A limit far larger than your real need quietly costs money each week.
  • Secondly, the costs drop if you repay fast. Because interest only runs while funds are drawn, the cheapest path is to draw what you need, fix the problem, and repay quickly. The minimum repayment is deliberately small, so left sitting drawn, a line of credit becomes expensive long-term debt that barely reduces.

Our View: A line of credit is a cash-flow tool, not a substitute for a term loan or a permanent overdraft. Used the way it is designed, drawn briefly and repaid quickly, it is genuinely flexible, and you only pay for what you use. Used as a balance that sits there for years, it is one of the most expensive ways to carry business debt.

Line of credit or business loan: which is cheaper for you?

The answer depends entirely on how much of the facility you would keep drawn, and for how long. If you would only dip into it occasionally, a line of credit is usually cheaper because you avoid interest on funds you are not using. If you would keep most of it drawn most of the time, a business loan often costs less, because you are not paying a service fee on a limit you are barely using.

Rather than guessing, use our business loan vs line of credit calculator to find the exact utilisation point at which one becomes cheaper than the other. If you simply want repayments on a fixed sum, our business loan calculator covers that.
Trusted Line of Credit Funding: Our View
If a line of credit is the right fit for your cash flow, the next question is who to borrow from. We compared the specialist lenders alongside the main banks (ANZ, ASB, BNZ, Kiwibank and Heartland), and for fast, flexible access to funds, Prospa consistently stands out.

Here is what sets Prospa's line of credit apart:
  • Ongoing access to funds up to $500,000, so you draw what you need, when you need it
  • You only pay interest on the balance you have drawn, not your full limit
  • No property security required for facilities up to $150,000
  • A decision in about an hour, with funding often available the same day
  • Unlimited extra repayments with no penalty, so you can clear the balance and stop interest whenever cash allows
  • Manage everything through the Prospa app or online, with Xero integration built in
  • A 14-day change of mind policy, so you can return the funds at no cost if your plans change

Important Update for any Business Looking to Borrow in 2026
  • We keep hearing from businesses and seeing it in data-driven media reports that banks are pulling back on unsecured business lending, and overdrafts are being trimmed.
  • Prospa, a specialist lender and trusted MoneyHub partner, has stepped into the gap, with rates from 14.99% p.a. and a decision in about an hour.
  • Prospa confirmed with MoneyHub that recent lending to established businesses (trading 3+ years, with solid turnover) typically sits between about 15% and 20%.
  • See the rate you'd actually pay with Prospa on their website.
  • Know This: Your rate depends on your trading history, turnover and industry, and these are annual simple rates, so your real cost is a little higher.

Know More: We Read Prospa's Audited Accounts
True to our consumer-first approach, we obtained Prospa NZ's audited accounts from the Companies Office for the year ended June 2025. Three things stood out, and all of them matter when you are trusting a lender with your cash flow:
  • They are financially healthy: Prospa NZ is profitable and has positive equity, indicating a stable lender more likely to work with you if your circumstances change.
  • They have money to lend: Prospa secured $190 million in new SME funding in late 2025, so when they say they can fund quickly, they have the capacity to back it up.
  • They are reinvesting, not extracting: Prospa NZ paid no dividends, retaining profits to grow its lending.
  • Prospa is backed by a parent group that has funded over $4 billion in small-business lending across Australia and New Zealand since 2012, funding more than 50,000 businesses.

Our view: For a line of credit, Prospa funds faster, asks for less security, and gives you genuine flexibility to draw and repay as your cash flow moves. If that suits your needs, it is the first provider we would look at.

Get a fast quote from Prospa - Checking your eligibility takes a few minutes and won't affect your credit score.

Line of Credit Fees and Interest Rates

Know This First: Be aware that advertised interest rates can differ from the rate you are actually offered, because lenders price each facility on your business circumstances. The interest rate depends on the health of your cash flow, how long you have been trading, your credit history and that of any guarantors, and whether the facility is secured. Unsecured lines of credit from fast-funding lenders sit at the higher end of the market, so always get your specific rate in writing before committing.

On top of interest, watch for these charges:
  • A weekly service fee, calculated as a percentage of your approved limit and charged whether you draw funds or not.
  • An establishment or setup fee when the facility opens, often a percentage of the limit.
  • Dishonour and late payment fees if a weekly direct debit fails.
  • Renewal terms. A line of credit is commonly available for a two-year term, after which the lender reviews your business to determine whether to extend it. If you are not in arrears at the end of the term, you may be able to repay the outstanding balance over a fixed weekly plan rather than as a lump sum.

Because every business is assessed differently, the only reliable way to learn your rate, limit and fees is to apply to lenders directly and compare the full offers, not just the headline rate.

Warning: A minimum weekly repayment on a line of credit may not be enough to clear your balance while funds remain drawn. It is made up of interest, a small principal slice and the service fee, so the principal can reduce very slowly. If you only ever pay the minimum, you can carry a balance and its cost for years.

Frequently Asked Questions

Know this: Missing a repayment on a line of credit has real consequences. Dishonoured direct debits attract fees; repeated late payments can damage your ability to borrow in the future; and persistent arrears can put the going concern of your business at risk. If a facility is secured, the security can be repossessed if you do not keep up with repayments. If you are heading for trouble, contact the lender early, as most will work with a business facing temporary difficulty.​

How is interest charged on a business line of credit?

Interest is charged at a fixed rate, calculated daily on your drawn balance, and added weekly. You pay interest only on the funds you have drawn, and only until you repay them. Repay the balance, and the interest stops, which is the main advantage over a term loan.

What is the weekly service fee, and why does it matter?

The service fee is a small percentage of your full approved limit, charged every week regardless of how much you have drawn. It is the cost most borrowers overlook, because a lender's interest figure usually excludes it. The fee is the main reason to apply for a limit close to what you will realistically use, rather than the largest amount you can get approved.

What is the maximum limit for a business line of credit?

It depends on the size and cash flow of your business, but facilities of up to $500,000 are commonly available from specialist lenders. In practice, your approved limit is tied to your turnover, with many businesses qualifying for around 10% to 20% of annual revenue. The only way to know your number is to apply.

Will the minimum repayment clear my balance?

Not while funds remain drawn - the minimum weekly repayment is made up of interest, a small principal component (often 0.5% or 1% of the drawn balance) and the service fee. That principal slice is deliberately small, so paying only the minimum can leave a balance sitting for a long time. To clear it, you need to repay above the minimum or pay it off in full.

Can I repay a line of credit early?

Yes - you can repay the drawn balance at any time to stop interest accruing, which is exactly how the product is meant to be used. Check the contract for any early-repayment or exit fees, and remember that, in most cases, the service fee continues while the facility remains open.

How is a line of credit different from a business overdraft or credit card?

All three are revolving, but the pricing differs. A line of credit typically combines daily interest on the drawn balance with a service fee on the limit. A bank overdraft is usually cheaper if you can get one, but harder to qualify for. A business credit card can be cheaper still for short interest-free periods, but expensive if you carry a balance. To make an informed choice, you'll need to compare the all-in cost of each option in detail.

Where can I get the best line of credit deal?

  • Our guide to business loans explains everything you need to know, and popular alternatives. We also review Prospa, a specialised business lender.
  • Our guide to business credit cards outlines current offers available, and why business credit cards can be a low-cost alternative to applying for a business loan.
  • Having a good personal credit history is important - our guide to credit scores and reporting explains what you need to know.
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